I know, it's the age-old question: can fiberglass insulation burn?
Not really, but there is a caution!
There are many kinds of chimney vents - masonry and metal. 
One particular type is called a "Type B vent." A Type B vent utilizes two different tubes - an interior tube which carries the heat and a surrounding tube which does not touch the interior tube.
The separation allows for the dissipation of heat so that what outer ring touches would not get too warm.
It is a safety feature. This Type B vent is used for gas appliances (furnaces and fireplaces), not solid-fuel appliances like wood or coal.
However, the International Residency Code requires a separation between the outer ring and anything it might touch inside a house.
Why? If the outer ring is cooler what could be the harm of it touching anything? And especially something that is not considered combustible, like fiberglass insulation?
From the IRC:
G2425.4 Insulation Shield.
Where vents pass through insulated assemblies, an insulation shield constructed of not less than 26 gage sheet metal shall be installed to provide clearance between the vent and the insulation material. The clearance shall not be less than the clearance to combustibles specified by the manufacturer's installation instructions. Where vents pass through attic space, the shield shall terminate not less than 2 inches above the insulation materials and shall be secured in place to prevent displacement.
Most manufacturers require a 1" or 2" space around their Type B vent materials. Often the space instruction is stamped onto the vent itself. In this case I could see no stamp, so on a report I can only say that the manufacturer should be consulted as to the distance they require.
But the question remains - if fiberglass insulation cannot burn, why worry? Keep in mind, this is not only a code, it is a FIRE code. Fire codes are very specific.
The answer to the question is: because of the rare, but possible, chimney fire. Chimney fires can burn around 2,000F! That's hot! At that temperature fiberglass insulation actually acts to absorb and spread the heat. Hence, nearby combustible materials, as you see here, can ignite. This is a condo. A spreading fire would not be good.
This inspection is on a new condo, before anyone has occupied it. The fabled final walk through! I often wonder how the builder will react to a comment on a report about something like this, perhaps considering it to be unimportant minutia. The builder might even try to skirt it by saying the county already approved it. This is in a very narrow attic space requiring a taller-than-usual ladder to get to (10'). So, did the county see it? The home inspector sure did! I wonder what the local fire marshal would say!
Nonetheless, I don't write the code. And the code is a MINIMUM standard! Building to code is NOT impressive. Building to a Best Practices standard would be impressive!
My recommendation: it is not the requirement of the home inspector to cite codes. But sometimes it's necessary. Either this insulation installer did not know about the Type B vent separation instruction, or did not care. I suspect the former. But it's the home inspector's job to observe and report. Even if the code is not cited in the report (which this home inspector did) it is still the code. If the supervisor does not know that, well, shame on him...
And yes, I was the home inspector.
Jay Markanich Real Estate Inspections, LLC 
Based in Bristow, serving all of Northern Virginia.
Office (703) 330-6388 Cell (703) 585-7560
Good morning, Jay.... anything related to "fire code" is most important.... this is the reason for pulling permits and having work inspected.... so many avoid that to prevent taxes on the home from increasing...pennies compared to a fire.
Good catch Jay. This is an important safety find and the buyer is lucky to have you on their side.
This is a brand-new condo, Barbara. As you can imagine, builders don't like people like me coming in to throw wrenches into the works...
I haven't heard from the buyer Debbie, but I suspect the builder did not like my find!
Goodness. If buyers, sellers, builders, inspectors, etc. are going to seek safety for home buyers, seems to me that fire prevention should be the #1 goal.
And it would seem that installers making basic installations would know those things too Lenn.
Thank you for the information. I always learn something new from your posts.
That's the idea Gita! Thanks for stopping by, again!
That's why we call people like you we have enough to do. :) Good stuff Jay
Get up there and have a peek James!
Safety is no accident. Wise words I know you live by.
I had the old "many accidents are planned for" discussion with a client just the other day Scott!
I always learn something from your posts! This time it was that a chimney fire would cause the insulation to get extremely hot and could cause the combustion of nearby items. Yikes.
The builder probably didn't like your findings but, um, too bad! Better to resolve it now than AFTER a fire.
Good morning Jay,
Thank you for the information; anothr item for my check list for my buyer's.
Make yourself a great day.
Lots of DIY projects don't require a permit...and that can be to the detriment of the homeowner...just as an inspector who is less than complete or knowledgable.
And if the fire happens long after the builder is not arount Kat? The county approval is just that, and county people are not held accountable.
Raymond - your check list is growing!
S&D - once again, we don't know what we don't know. The builder here should have known!
I love reading posts by inspectors as I learn so much. Thanks for sharing about fireplace vents and insulation and the space needed in between the two.
Jay, looks like the County inspector didn't have a 10 foot ladder. Another reason and the importance for having a home inspection.
Good post Jay. I often read about home inspectors debating over this very topic.
There are just so many issues you find during your inspections...ones I would never even think of. But that's why you're the home inspector and I'm not :)
Jay,
Disregarding manufacturers recommendations often times comes at your own peril.
Rich
Now with fall coming attics may be cooler allowing you to poke around more safely.
Hi Jay,
I have taken pictures and wrote this up for years. Nothing is ever done about it. But I will continue as a SOP.
I have rarely seen any damming of the insulation no matter what kind or how it was installed.
Have a great day in Bristow.
Best, Clint McKie
I'm glad you do Jill! Stop by anytime!
Mike - I have never known a county inspector to venture into the attic for a final inspection.
Bill - most people would not be. This has been a problem for a long time however!
Juan - not sure why there would be debate! There is the code and there is the manufacturer's instructions. Either trumps the issue and set the course.
Suzanne - inspectors are looking at a thousand things during a home inspection!
It does Rich. They have those instructions for reasons.
Dwight - in this case the space is very narrow and lots of insulation! But summer temps don't stop me from poking around!
Not sure what will be done here Clint, but as you know, we have the obligation to observe and report.
Jay, this I did not know. I, too, would rather aspire to Best Practices than Code, which tend to be minimums...
Jay -- as has been noted before, on multiple builds like this (whether condos, or plat of homes) the builder is usually consistent on their error/omissions like you found here -- it will be interesting to know if he fixes them all or just this one.
The code is the floor of expectation Chris. Best Practice is something entirely different. That is what inspired me to start the Best Practices Group here on AR.
Steven - I expect the same mistake is made EVERYWHERE in this development because it is probably the same insulation company throughout. The builder has no incentive to fix anything but what it has been caught on.
Great information to know. I wasn't aware of this. You'er completely right about not doing things to the minimum level. Always strive for the best. But if you're not going to strive for the best, AT LEAST be up to code.
Thanks Trisha. They are SUPPOSED to be up to code! Best Practices are voluntary!
Jay - Great information as usual... and I had never though of the fiberglass carrying the heat over to other combustible material.
AJ - when it gets below 10F fiberglass insulation actually draws heat out of the house!
Good evening, Jay. AT 2,000 degrees, the metal tubing would melt or warp. Whether insulation was present or not, the property would most likely be toast!
I don't know if it would melt Michael, but that is the temp the code is intended to try to control - the 26 gage is important. Confined fires get hot!
I've heard about the metal issues. Thanks for the reminder. :)
Love and light,
Laura
That's pretty cool to see you go in the attic Judi! It's good for the psyche! That kind of combo appliance probably does not have an IC sticker (Insulation Compatible) which would allow insulation to be packed around and over it.
Metal is good Laura! Especially when treated right.
Jay, I see these missing baffles all the time. People just don't get that the pipe will not be able to cool itself properly and in some cases the insulation can conduct that heat to materials that do burn.
That's pretty much what the fire code reads around here Charlie. And that on top of a stud wall a solid fire block needs to be installed to prevent fire from passing and spreading via insulation also.
Jay, what is a B vent ; ) Anyway you are right they must be installed correctly.
I think there's A, B and C, Don. Kind of like the Sears system - good, better and best.
Yeah, that's it.
No challenge to your work, or the code, but I'm just curious: Have you ever heard of a chimney fire in a gas-fired appliance vent that was never used for solid fuel?